2013 (11) TMI 399 - AT - Service Tax

Commercial and industrial construction services - finishing services such as glazing, plastering, painting, floor and wall tilling, wall covering and wall papering, wood and metal joinery and carpentry etc. Held that - The services are held as finishing services and accordingly fall outside the purview of the said notification No. 1/2006 - Decided against the assessee. Assessee contended that they have paid VAT on the materials supplied in rendering the service and the value of the material should be excluded from the total value of the services in view of Notification No. 12/2003 - Held that - This plea has not been made before the adjudicating authority and accordingly not considered the principal contractor has categorically stated that they have discharged the service tax against five projects allotted to the present appellant - these facts need verification The Appellant are directed to deposit amount as pre-deposit the case remanded back to the adjudicating authority for consideration of their alternate plea of eligibility of Notification No.12/2003 and also the claim that Service Tax paid by their principal contractor Decided in favour of Assessee.

Summary

Issues:
1. Waiver of pre-deposit of Service Tax and penalty under Section 78 of Finance Act.
2. Applicability of Notification No. 1/2006-ST dated 1.3.2006.
3. Liability of service tax on commercial and industrial construction services.
4. Verification of material cost value for service tax calculation.
5. Direction for depositing admitted liability before remanding the case.

Analysis:

1. The application sought waiver of pre-deposit of Service Tax amounting to Rs.59,41,735/- and an equal penalty under Section 78 of the Finance Act, along with penalties under other provisions. The appellant claimed to have carried out activities as a sub-contractor for a specific company. A portion of the demand had been paid by the principal contractor, and the appellant argued for the applicability of certain exemption notifications. The appellant offered to deposit the balance amount they deemed payable.

2. The key issue revolved around the interpretation of Notification No. 1/2006-ST dated 1.3.2006 concerning the exemption claimed by the appellant for their services. The Department contended that the services provided fell under finishing services, not covered by the said notification. The appellant alternatively sought the benefit of Notification No. 12/2003-ST dated 20/6/2003. Reference was made to relevant case law to support their position. The appellant made a deposit offer while contesting the Department's denial of exemption.

3. The central matter addressed was the liability of service tax on the commercial and industrial construction services rendered by the appellant. The services provided were categorized as commercial or industrial, involving activities like supplying, fabricating, erecting, and installing various elements. The appellant claimed entitlement to exemption under Notification No. 1/2006-ST dated 1/3/2006 but faced challenges as the services were considered finishing services by the Ld. Commissioner, thereby impacting the applicability of the said notification.

4. Regarding the verification of material cost value for service tax calculation, the Revenue did not dispute the payment made by the principal contractor but raised concerns about the lack of a claim regarding the material cost value. The matter was suggested for remand to the adjudicating authority for verification purposes. The Revenue emphasized the necessity for the appellant to deposit the admitted service tax amount before any further action.

5. Ultimately, after considering both sides, the Tribunal decided to dispose of the appeal at that stage with the consent of the parties. The appellant was directed to deposit a specified amount within a set timeframe, and the case was remanded to the adjudicating authority for further examination, including the appellant's alternate plea and the verification of the principal contractor's service tax payment. Both parties were granted the opportunity to present evidence, and the adjudication was to proceed after compliance and due hearing, thereby allowing the appeal by way of remand.

This detailed analysis of the judgment covers the various issues involved and the Tribunal's decision on each aspect of the case.